What can we learn from Malta's digital ambitions?

For a truly digital economy to succeed, regulation needs to be in place to ensure that technologies are deployed ethically and to the benefit of users. In reality, though, regulation often lags behind technologies, playing an endless game of catch-up as innovation outpaces legislation. The small island nation of Malta, however, aims to change that, positioning itself at the forefront of blockchain deployment and concurrently setting up a regulatory body to oversee the deployment.

The newly-created Malta Digital Innovation Authority will take responsibility for the regulation not only of distributed ledger technology [DLT] as initially proposed, but also for “AI [artificial intelligence], IoT [Internet of Things], Quantum technology, and big data,” according to parliamentary secretary Silvio Schemer. According to the Times of Malta, the authority was set up to regulate locally-based businesses working with smart contracts and distributed ledger technology, or blockchain. It was established as part of Malta’s push to become a leader in the DLT space.

Regulating a new financial ecosystem

Jeffrey Tucker, author of bitcoin treatise Bit By Bit and editorial director of libertarian think tank American Institute of Economic Research (AIER), explains that the series of laws Malta has passed over the past year are very welcome to the next generation of blockchain-based businesses. “These go far beyond accommodating cryptocurrencies,” he says.

“They touch on organizational structure in a digital age. Instead of force fitting new tech into an old-tech model, the laws grant legal security for experimentation. This is a huge difference from the way US and EU laws are treating crypto innovation. It's the persistent legacy uncertainty that has hurt adoption, so Malta is addressing that. This is why, for example, the most highly capitalized crypto companies are locating here.”

Bianca Wright is a UK-based freelance business and technology writer, who has written for publications in the UK, the US, Australia and South Africa. She holds an MPhil in science and technology journalism and a DPhil in Media Studies.